"We think they do, quite frankly," Mullen said on CNN's "State of the Union" program when asked whether Iran has enough fissile material for a nuclear weapon.

"And Iran having nuclear weapons, I've believed for a long time, is a very very bad outcome - for the region and for the world," Mullen said.

A watchdog report issued by the International Atomic Energy Agency two weeks ago said Iran had built up a stockpile of nuclear fuel, raising alarm among Western governments that Tehran might have understated by one third how much uranium it has enriched.

The United States suspects Iran of trying to use its nuclear program to build an atomic bomb, but Tehran insists it is purely for the peaceful generation of electricity. Enriched uranium can be used to make nuclear weapons.

US President Barack Obama's administration, which favors diplomatic engagement with Tehran to defuse the dispute over its nuclear intentions, called Iran's nuclear program an "urgent problem" the international community must address.

The IAEA report
showed a significant increase in Iran's reported stockpile of low-enriched uranium (LEU) since November to 1,010 kg - enough, some physicists say, for possible conversion into high-enriched uranium for one bomb.

The IAEA later said Iran was cooperating well with UN nuclear inspectors to help ensure it does not again understate the amount of uranium it has enriched, suggesting the uranium accounting shortfall might not have been deliberate evasion.